​One of the great benefits derived from having seven billion people on the planet is that there are a lot of people regularly doing a lot of really stupid things. How is this beneficial? With a little observation, one can easily learn from the mistakes of others…

I’ll share one of these observational concepts relating to business growth; essentially a validation of the Peter Principle (that any employee rises to his or her own level of incompetence). I’ve found the principle applies equally to founders. Consider the following thresholds:

Skill – Many people start businesses, and those with some level of technical competence often achieve a degree of small-scale traction. A competent cabinet maker, for example, might end up selling a few cabinets to his friends and neighbors. That represents a very small unsustainable business. In this stage, he must learn to work smarter.

Capacity – If the cabinet maker gets a clue, he might end up promoting his cabinet business, and thereby sell as many cabinets as he personally finds time to make. This might result in a few hundred thousand dollars of cabinets being sold. He’s achieved modest growth, but is still running a rather small business, limited by the length of his work-day. In this stage, he must learn to ask for help.

Delegation – If the cabinet maker decides to delegate some minor tasks, he might end up producing as many cabinets as he can reasonably supervise. Say one can directly micro-manage a half-dozen people, and he might hit a million dollars per year. In this stage, he must learn to stop micro-managing.

Replication – Now the cabinet maker has a serious problem. He honestly believes that nobody makes cabinets as well as he does, and if he insists on touching every cabinet, he will be doing a million dollars per year forever. On the other hand, if he starts to run this enterprise like a real business, he could hire other cabinet makers (and perhaps do several million per year). In this stage, he must learn to hire competent people and let them do their jobs.

Management – He hires some other cabinet makers, and soon wakes up in a cold sweat realizing that there are cabinets being sold that he’s never even seen. Eventually, he understands that his role is no longer about building cabinets; but rather ensuring that other people are effectively building cabinets (maybe $10M+). In this stage, he must learn to develop his team.

Leadership – Having mastered the fundamentals of management, he recognizes that it has been a long time since he last assembled a cabinet. However, the team he developed tells him that the cabinets are of superior quality, and demand has increased exponentially. They look to him for guidance, but he doesn’t have all the answers anymore (this thing is rocketing towards $50M+). In this stage, he must learn to attract and hire people smarter than him, and inspire them to fulfil their collective potential.

In summary, when a founder’s personal and professional growth stagnates, their business predictably stagnates as well. If you doubt these observations, feel free to learn the hard way.